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Cushman & Wakefield, an international real estate company with a strong Canadian component, said Toronto’s downtown south core centered around Union Station has become the go-to destination for anybody looking to locate in the city.

“The redefined centre ice is probably Union Station,” said Stuart Barron, national director of research at the company, referring to the rail station that serves as a hub for Toronto’s subway system, provincial rail operator Go Transit and Via Rail.

“Part of this is because Toronto has become more and more of a commuting challenge. Bay and King is still an excellent location,” he said.

The real estate company said downtown south has become Toronto’s fastest-growing sub-market with a vacancy rate of 1.7 per cent. The area barely registered with businesses before 2009, but now has five million square feet of office space, with 1.6 million square feet of that added in the last quarter alone.

The area is expected to continue growing, with Ivanhoé Cambridge planning a 1.5-million-square-foot development that will include two towers with access to Union Station.

Cushman & Wakefield notes much of the expansion in the area has come at the expense of older premium towers named after some of Canada’s largest banks. It said the vacancy rate in Toronto’s old finance core during the second quarter rose to 7.4 per cent from 4.3 per cent a quarter ago.

The old financial district has newer buildings such as the Bay-Adelaide Centre complex, but it is also home to towers that date back as far as 1967 and do not meet the needs of modern tenants.

It’s become a talent hub in tech. It’s almost an incubator in the south core

“It’s much more of a challenge to get the density or less space per work station in older buildings. There are only so many modifications you can make to things like air handling capacity and other key factors,” said Barron, adding that rental rates can be as much as $3 to $5 more per square foot per year in new buildings but the space might pay for itself over the long term.

Dave Borrelli, area vice-president of commercial sales at San Francisco-based cloud computing company Salesforce.com Inc., which is located in WaterPark Place in downtown south, said the area is attractive to prospective employees.

“It’s become a talent hub in tech. It’s almost an incubator in the south core. We are benefiting from a decision that was made 10 years ago,” said Borelli, referring to the company’s original location decision when it came to Canada.

Salesforce.com is now upgrading its facilities, where it houses 600 employees. It will have 91,000 square feet in the south core by 2017. “We just have a lot more open space,” said Borrelli, explaining the preference for a newer building.

But it might be a little too early to bury Bay and King streets as the centre of Toronto’s financial district, said Dean Newman, principal broker at Cresa Toronto, which exclusively represents tenants on leases.

“It’s hard to deny a lot of people have moved into the south core; that is real. The amenities are real and growing,” Newman said.

But he added that he was talking to an executive this week who once considered moving further south and is happy he didn’t.

“He thinks there is too much (residential) density and it’s a long walk when you are going to a meeting (at Bay and King streets),” said Newman. “For now, I think Toronto has two centre ices.

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